The Scottish Government has been urged to extend rates relief measures announced by prime minister Andy Burnham to hospitality businesses north of the border, as the industry repeats its calls for Westminster to move on VAT.
One of the new prime minister’s first announcements after taking office was to unveil a 20% business rates cut for pubs, clubs and live music venues in England.
The move, taking effect from April of 2027, is estimated to cover over 30,000 premises across England.
Now, the industry north of the border is calling on Holyrood to extend its own relief to take in Burnham’s additional 20% cut.
In Scotland, premises with a rateable value up to £12,000 are exempt from the rates system, with premises that have rateable values between £12,001 and £20,000 receiving tapered support.
Island premises are also currently receiving 100% rates relief, with mainland business with a rateable value up to £100,000 currently receiving 40% rates relief.
Leon Thompson, executive director of UKHospitality Scotland, said the current Scottish relief ‘is welcome and is helping many businesses manage significant cost pressures’ but warned that many larger hospitality businesses ‘are locked out of support’.
“Despite facing the same cost pressures as everyone else, they are unable to access relief they need to invest, create jobs and drive growth in their local communities, due to the current threshold,” said Thompson.
“The next Scottish Budget is an opportunity to put that right and we look forward to continuing our discussions with the Scottish Government to ensure more businesses in our sector can benefit from meaningful business rates relief.”
SLTA managing director, Colin Wilkinson, called on Holyrood to extend its rates relief ‘in the strongest terms’.
“With additional funding coming to Scotland through the Barnett consequentials, we urge – in the strongest terms – that this additional financial support flows directly through to the Scottish licensed hospitality sector and is not diluted to other sectors,” he said.
“The Scottish Government also needs to look at lower poundage rates for hospitality, as well as reforming the valuation methodology.
“Why should a typical licensed premises in Scotland be valued higher than an equivalent venue in England? The business rates system is broken.”
A spokeswoman for the Scottish Government said: “The Scottish Budget 2026-27 supports business and communities with a package of reliefs worth in excess of an estimated £870 million and almost all (96%) of retail, hospitality and leisure businesses in Scotland can benefit from some form of rates relief.
“The Scottish Government also funds the Small Business Bonus Scheme, which more than 100,000 properties are eligible for, and which remains the most generous scheme of its kind in the UK.
“The deputy first minister recently announced a comprehensive review of non-domestic rates. This will examine improvements and reforms that can be made to the system, working closely with business to ensure the system provides the clarity, incentive, and transparency which businesses need.
“We are seeking clarity from the UK Government how their announcement will affect funding for Scotland’s block grant.
“Our own decisions on rates and reliefs will be set out in the normal way as part of the Scottish Budget.”
The pressure isn’t just on at Holyrood, however.
Wilkinson said that a reduction in the VAT rate – a power reserved to Westminster – would be ‘the big one’ for hospitality businesses across the UK.
“There was some relief when VAT was reduced to 5% for the hospitality and hotel sectors in Scotland in July 2020, later going up to 12.5% which was still a great help,” said Wilkinson.
“However, since VAT returned to the standard rate of 20% at the beginning of April 2022, licensed hospitality businesses have had to contend with rising utility bills, increased staff costs and cost-of-living pressures which affect both businesses and their customers. A reduction in VAT would boost business viability in what remains a challenging trading climate.”
